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Hillsboro district projects $20 million shortfall next year as enrollment declines
Summary
District financial staff told the board the governor's budget would raise state funding about 5.4%, but rising staffing and non-staff costs and lower enrollment could leave Hillsboro with an estimated $20 million deficit for the next fiscal year.
District finance staff presented the budget development assumptions the board will use as they prepare next year's budget, projecting a sizable shortfall unless revenue or cost conditions change.
Scott Harrison, the district's financial officer, told the board the district's starting revenue estimate depends on the governor's proposed 2025 biennial budget. Using the governor's $11.3 billion proposal, Hillsboro's estimate shows about a 5.4% increase in state revenue for the coming year. Harrison said those are the district's current assumptions but cautioned that federal funding and other developments could alter the final picture.
On the cost side, Harrison said staffing is the dominant driver: salaries and benefits account for roughly 84% of the district's expenditures. The budget model currently assumes a 6.25% general salary increase and a 7.5% rise in benefits (with PERS increases a major component). Non-staffing costs were modeled at a 4% increase, although current projections show those costs might rise as much as 9.4% in the next year. Harrison cited specific cost pressures such as an expected 17% increase in liability insurance premiums.
Jeff, manager of business services, presented enrollment projections that inform the revenue forecast: the district's enrollment was about 18,326 students in 2024, the staff estimate for 2025 is 18,119, and the estimate for 2026 is 17,922. Demographer estimates presented to the district were slightly higher; one report suggested a possible 6.3% drop by 2029 (about 1,165 students), but district staff said they are using their more conservative baseline and monitoring changes monthly.
Harrison and Jeff said the combination of rising costs and falling enrollment creates a gap the district must address. Scott Harrison said the district's current working estimate of the deficit going into next year is approximately $20,000,000. He said the board and district administration will present a savings plan in March to close the gap and consider operational contingencies.
Board members asked cost-clarifying questions. Harrison gave ballpark estimates: the district estimates the cost of one school day at roughly $1,486,000 and estimated that reducing the licensed staffing ratio by one (a class-size reduction across the district) would cost about $2.9 million (roughly 20 licensed positions). Harrison said the district will continue to refine projections and bring a specific plan for reductions and contingencies to the board; possible responses include staffing adjustments, one-time fund use, program reductions or fewer days of school.
Harrison said the district will continue negotiations with classified staff (one bargaining unit remains open), monitor federal program decisions, and update numbers as bargaining and legislative actions finalize.
The board scheduled additional budget committee meetings and a public hearing on adoption; staff said the budget adoption hearing is expected on June 17 with implementation July 1 if the district completes the necessary adjustments.
No formal budget action was taken at the meeting; the presentation was informational and designed to begin a process of public budget planning and savings analysis.
